Financial integration within EU countries
Subtitle: the role of institutions, confidence and trust
By: Mehmet Fatih Ekinci, Sebnem Kalemli-Ozcan, Bent Sørensen.
Contributors: Kalemli-Ozcan, Sebnem.; Sørensen, Bent E.; National Bureau of Economic Research.
Series: NBER working paper series -- no. 13440.; Working paper series (National Bureau of Economic Research) -- working paper no. 13440.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 78
Subjects: European Union -- Economic integration -- Econometric models; Social capital (Sociology) -- European Union countries; Finance -- European Union countries
Description: We investigate the degree of financial integration within and between European countries. We construct two measures of de-facto integration across European regions to capture "diversification" and "development" finance in the language of Obstfeld and Taylor (2004). We find evidence that capital market integration within the EU is less than what is implied by theoretical benchmarks and also less than what is found for U.S. states. We ask - why is this the case? Using country-level data for economic institutions, we find that these are not able to explain differences between countries. Using regional data from the World Values Surveys, we investigate the effect of "social capital" on financial integration among European regions. We find regions, where the level of confidence and trust is high, are more financially integrated with each other.
Notes: "September 2007"

Includes bibliographical references (p. 53-56).

Also available in PDF from the NBER world wide web site (www.nber.org).